An annuity that begins monthly benefits immediately after issuance is referred to as what?

An annuity that begins paying benefits immediately after it is issued is known as an immediate annuity. This type of annuity typically requires a lump sum payment upfront and then starts making regular payments to the annuitant almost right away, often within a month of the purchase. Immediate annuities are designed for individuals who need instant income, making them particularly suitable for retirees or those who wish to convert a lump sum of money into a stream of income.

In contrast, a deferred annuity would delay the payment of benefits until a later date, allowing the investment within the annuity to grow before the payout begins. A fixed annuity guarantees a specific rate of return and regular, fixed payments, but it can be either immediate or deferred depending on the terms chosen. A variable annuity allows for investment in various securities, with payments fluctuating based on the performance of those investments. Hence, the immediate annuity stands out in its structure by providing immediate access to benefits after issuance.